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Economic growth is unambiguously impaired when inflation stays above 6 percent, the Deputy Governor said. He added that the central bank hopes to rein in inflation within two years..


Inflation likely to be outside RBI's tolerance band for three consecutive quarters, says Deputy Guv

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NamePriceChange% Chg
Ntpc137.050.550.4
Sbi454.853.450.76
Indiabulls Hsg101.552.052.06
Rec117.600.700.6

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YOUR OPINION

Which of these youngsters will score more runs this ipl?

COMMENTS

Thank You for Voting

Stock News

Can Darden Restaurants (DRI) beat inflation woes and remain palatable?

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The restaurant business is one of the worst affected by the pandemic as the movement restrictions made people eat at home rather than dining out. With the situation improving progressively, there is optimism among restaurant operators that customer footfall would bounce back and reach normal levels in the near future.

When it comes to Darden Restaurants, Inc. (NYSE: DRI), recent data from the casual dining chain corroborates the recovery theory, but the strain on margins raises concerns that inflation might weigh on the bottom line in the near term. However, the business is back on track and the company’s performance often exceeded the pre-pandemic levels this year.

Hold It?

Shares of the Orlando-based firm, which owns popular brands like Olive Garden, are currently trading below the long-term average but they’ve managed to resist pessimism linked to the weakness in the broad market and economic uncertainty. It is very likely that the current uptrend would gather momentum in the coming months, but the best thing prospective investors can do is to adopt a wait-and-watch strategy.


Read management/analysts’ comments on quarterly reports


Also, keeping a tab on the macro issues and pandemic situation would help in taking informed decisions when it comes to buying or selling the stock. Though the valuation is tempting from a long-term perspective, a little bit of patience now would pay off in the future, considering the growing recession fears.

Recovery

As part of its efforts to enhance sales and profitability, the company is investing in guest experience and taking steps to simplify operations. The idea is to return to the performance levels seen towards the end of 2021 when sales bounced back — people returned to the habit of dining out after restricting themselves to home-based food for many months. But the recovery proved to be short-lived then, to some extent, due to the resurgence of COVID cases.

trending stocks high volatility

More than the virus-related uncertainty, what worries the management is the growing cost pressure in key areas of the operation like logistics, raw material inputs, and labor. While higher menu prices can ease the impact on margins to some extent, more measures are needed to strike the right balance between pricing and maintaining competitiveness.


Stock Watch: Here’s What You Need to Know before investing in Kellogg


“As we begin our new fiscal year, our focus remains on driving profitable sales, investing in the guest experience, and simplifying operations. Darden’s strategy, and our strong balance sheet, position us well regardless of the operating environment,” said Darden’s CEO Gene Lee during an interaction with analysts this week.

Mixed Q4

For the final three months of fiscal 2022, the company reported earnings that beat estimates. In the previous quarter, the bottom line had missed estimates for the first time in about five years. At $2.6 billion, net sales were up 14% year-over-year and above the market’s projection. However, earnings decreased to $2.24 per share from $2.78 per share last year.

DRI’s value shrank by a fifth so far this year but the stock mostly outperformed the market during that period. It traded up 2% on Friday afternoon.



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Buy IRIS Energy Stock, Get Bitcoin Mining For Free (NASDAQ:IREN)

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Eoneren/E+ via Getty Images

Understanding IREN’s Business

Iris Energy (NASDAQ:IREN) is marketed as a pure-play sustainable Bitcoin (BTC-USD) mining company where 100% of its power used is renewable. To us, sustainable bitcoin mining is a big deal and it is one of the critical criteria for any Bitcoin mining company to be investable. It is one of the key reasons we got into Bitfarms (BITF) in the first place.

Kevin O’Leary explained this well. Institutions have yet to delve into Bitcoin in any major way due to ESG concerns. Non-sustainable Bitcoin mining companies can still meet ESG requirements by being carbon-neutral (e.g., buy carbon credit, or plant trees to offset generated carbons) but will not be able to do so once more concrete regulations are issued in the near future by relevant governing bodies. It is also difficult for auditors to endorse carbon credits due to large errors in estimation and are liable for inaccurate claims. Therefore, sustainability is key when looking at Bitcoin mining companies. In this respect, IREN has met our first criteria of being investable.

IREN is a relatively new and small player in the Bitcoin mining sector. Currently, the company only has 0.8 EH/s compared to other players such as Riot Blockchain (RIOT) (4.3 EH/s) and Marathon Digital Holdings (MARA) (3.9 EH/s).

So does IREN provide more upside for investors when compared to more established players such as RIOT and MARA? Let’s find out.

IREN: A Real Estate Company like McDonald’s?

Aside from being a sustainable Bitcoin mining company, another aspect we appreciate is ownership of land and grid-connected power facilities. This aspect assures investors that mining operations are in total control of the company. The risk of competition for power is eliminated and the ever-increasing cost of land leases is no longer an issue. Besides, Bitcoin’s price appreciation won’t be the only contributing factor to the size of IREN’s balance sheet.

However, the competitive advantage of owning the land and grid-connected power facilities we’re looking for is the flexibility of hosting a profitable data center. Sometimes Bitcoin mining is also referred to as “hosting data centers”, a term we normally associate with Google and Microsoft, and both are true. O’Leary explicitly stated that should Bitcoin mining become unprofitable, pivoting from Bitcoin mining to hosting data centers for Google and Microsoft is a viable backup plan. We’re not acquainted with ASIC for cloud computing yet, but it seems that ASIC could be used for data centers as well. Should IREN’s ASIC miners have such flexibility, IREN could be well hedged against a Bitcoin bear market.

Following this narrative, IREN’s business model looks very similar to McDonald’s (MCD) where McDonald’s owns lands and leases the lands to franchisees.

More than 84% (12.6 EH/s out of 15 EH/s) of land contributing to IREN’s Bitcoin mining is 100% owned by IREN. We estimate the value of the land and grid-connected power facilities to be worth $95.5mil in CY2022Q1 or 50% of IREN’s market cap. This figure is based on IREN’s recommended cost of acquisition of $66mil per 1 EH/s. Table 1 presents the details of estates owned by IREN. Bitcoin mining equipment was not considered in the computation because the equipment is expected to be worth 0 in 5 years. Just to be conservative.

If cash on hand and liabilities are considered, IREN’s physical assets would exceed its market cap at the time of writing. This made us wonder, at a $200mil market cap, are we buying IREN’s real estate and getting its Bitcoin mining business for free?

Table 1: IREN’s Estates

Site

Location

Land Ownership

Mining Capacity

[17.06.2022]

MW

Power Source

Status

Canal Flats

British Columbia, Canada

100%

0.8 EH/s

30

100% Renewable

Operating

Mackenzie

British Columbia, Canada

100%

0.3 EH/s

1.5 EH/s (End2022)

2.4 EH/s (End 2023)

80

100% Renewable

Operating & Under Construction

Prince George

British Columbia, Canada

50Y Lease

1.4 EH/s (2022Q3)

2.4 EH/s (End 2023)

85

100% Renewable

Operating & Under Construction

Childress County

Texas, USA

100% (>300 Acres)

3 EH/s (2023Q1)

9.6 EH/s (2023Q3)

17.6 EH/s (No Date)

600

Excess/Underutilized Renewable

Operating & Under Construction

Source: Author, IREN

Buy IREN = Buy Real Estate and Get Bitcoin Mining Business For Free?

We think yes and we might know why.

IREN is currently trading below its net asset value. As of CY2022Q1, IREN has $557mil in total assets or $253mil in hard assets (land, grid-connected power facilities, and cash only). IREN has $98mil in total liabilities. This implies IREN has hard assets (excluding all Bitcoin mining rigs and prepaid to suppliers) of $155mil in excess of liabilities. IREN’s market cap is $200mil. Hence, IREN’s hard asset-only NAV is close to 80% of its market cap. At this valuation, it does look like we’re buying IREN’s real estate and getting its Bitcoin mining business for free.

Why is that? We think that this is because the Bitcoin mining business is currently a loss-making business at the current Bitcoin price.

Firstly, as of CY2022Q1, IREN’s total expenses excluding impairment and gains on asset price fluctuation is $14mil, where IREN only managed to mine 357 Bitcoins compared to 364 Bitcoins in CY2021Q4. This is odd because IREN reported an increase in mining capacity from 0.685 EH/s in CY201Q4 to 0.8 EH/s in CY2022Q1.

We felt that the data presented could be more transparent. IREN reported QoQ growth in Bitcoin mined in its CY2021Q4 report but switched to YoY growth in Bitcoin mining in its CY2022Q1 report. Instead of reporting a QoQ 2% drop in CY2022Q1, IREN reported 449% growth YoY.

Secondly, at $20,000 per Bitcoin, IREN is losing $20,000 per Bitcoin mined. This mining cost is consistent in both CY2021Q4 and CY2022Q1. In CY2021Q4, IREN mined 364 Bitcoin and incurred $14.5mil in cost (excluding impairment and asset value fluctuations), which implies a cost of $40,000 per BTC. In CY2022Q1, IREN mined 357 Bitcoins and incurred $14mil in cost, which implies a cost of $40,000 per BTC as well.

IREN’s non-cash expenses such as management stock compensation are perceived to be high but align with the sector standard (Table 2). MARA remains the Bitcoin mining company with the highest stock compensation to management among the 3 companies. However, IREN could be paying more stock compensation to founders and executives as IREN is still a new player and more milestone rewards are yet to be unlocked.

Table 2: Average Management Stock Compensation Comparison Table Since 2021

Miner

% of Total Expenses (Excluding impairment and asset value fluctuations)

IREN30%
RIOT25%
MARA55%

Source: Author

Even if non-cash expenses (such as depreciation and stock compensation) were to be excluded, IREN’s total mining cost per BTC ($22,550) remains higher than the Bitcoin price of $19,000 as of the time of writing.

Therefore, IREN’s Bitcoin mining is indeed a loss-making business and we associate this as the main contributor to IREN trading below its net asset value.

Valuation and Risks

We could not use our model to evaluate IREN’s Bitcoin mining business due to the Bitcoin price falling below IREN’s total mining cost per BTC. If Bitcoin sustainably falls below its total mining cash expenses per BTC ($22,550), its Bitcoin mining business would be worth 0 if IREN is sensible enough to stop mining at a cash loss.

Fortunately, IREN’s hard asset value is visible. As stated above, its hard asset value (land, grid-connected power facilities, and cash) in excess of liabilities is $155mil. Assuming IREN stops mining Bitcoin at a cash loss and minimizes non-cash expenses (such as stock compensation), a $155mil (or $2.90 per share) valuation is a good starting price to get into IREN. However, IREN is expected to see further downside on the overall sector sentiment.

What about IREN’s valuation based on expected capacity?

According to the IREN investor presentation, one of IREN’s investment value propositions is that IREN is trading at only 0.4x its expected hash rate. In other words, IREN is saying that it provides investors with better upside potential than other Bitcoin mining companies including MARA, RIOT, Hut 8 (HUT), Bitfarms, and Argo Blockchain (OTCPK:ARGKF).

Priced lower for good reason: Risks of not realizing target

Fig 1. Priced lower for good reason: Risks of not realizing target (IREN)

We find this proposition to be not as appealing because there is a big IF. IREN can only provide better upside ONLY IF it can follow through on its target mining capacity. Unfortunately, it is more likely that IREN will not achieve this target. Since IREN’s expected capacity is comparable to MARA and RIOT, let’s focus on MARA and RIOT.

History taught us that miners often miss targeted mining capacity. In CY2021Q1, MARA targeted 10.37 EH/s by early 2022. However, it only managed to achieve 3.9 EH/s, only 40% of the targeted capacity. With MARA and RIOT as references, the expected capacity grows about 0.4 EH/s quarterly. This aligns with IREN’s QoQ capacity growth as well. IREN’s CY2022Q1 QoQ growth is about 0.2 EH/s.

if we consider the risk of not following up on the targeted mining capacity, IREN is fairly priced. Given similar expected capacity, With the assumption that capacity growth is similar across mining companies, IREN should be priced 72% lower than MARA or 77% lower than RIOT.

As of 20.06.2022, IREN is priced 70% lower than MARA and 65% lower than RIOT. This means that IREN is fairly priced but RIOT should be priced 17% higher than IREN. This aligns with our previous findings that RIOT is 20% undervalued when compared to MARA.

Fig 2. Market Cap of IREN, MARA, RIOT

Fig 2. Market Cap of IREN, MARA, RIOT (YCharts)

This finding shouldn’t be taken as a call to buy RIOT. In our recent coverage, we showed that Bitcoin has completed 4 out of our 5 predicted sequences of events and discussed why it is more probable for Bitcoin to break its $20,000 historic support level to reach $10,500 than to bottom out from here. This would complete all of our 5 predicted sequences of events. Should our thesis hold, we expect to see further downside for Bitcoin mining companies (including IREN, MARA, and RIOT) due to higher Beta and additional risks (e.g., insolvency).

Today, we continue to uphold our thesis that investors should consider staying away from Bitcoin miners until the end of 2022 when Bitcoin is expected to complete its 1-year bear market by then.

Conclusion

We find IREN attractive for the following reasons:

  • IREN’s Bitcoin mining operations are powered by renewable energy, very different from being just carbon neutral.
  • IREN owns at least 84% of the land and grid-connected power used to host its data centers. This provides IREN with the ability to recondition its equipment to host more types of data centers should Bitcoin mining become unprofitable.
  • IREN’s market cap implies that investors are buying into its real estate and grid-connected power facilities, and are getting its Bitcoin mining business for free.
  • Although IREN is currently fairly valued, IREN provides more upside if investors are willing to undertake more risks.

However, as stated above, we expect further downside for IREN which provides investors with a better entry price.

What we would like to see IREN improve is its mining cost. IREN’s mining cost is consistently about $40,000 for CY2021Q4 and CY2022Q1. This is 30% higher than both MARA and RIOT. Another aspect we’re concerned about is there might be more stock compensation for founders and executives waiting to be unlocked in the future. Imagine that the market cap keeps increasing but the share price remains relatively the same or does not grow as much due to dilution from stock compensations. Hence, these non-cash expenses are expected to prevent investors from realizing the full upside reward.



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La-Z-Boy Incorporated (LZB) Q4 2022 Earnings Call Transcript

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La-Z-Boy Incorporated (NYSE: LZB) Q4 2022 earnings call dated Jun. 22, 2022

Corporate Participants:

Kathy Liebmann — Investor Relations

Melinda Whittington — President and Chief Executive Officer

Bob Lucian — Senior Vice President and Chief Financial Officer

Analysts:

Bradley B. Thomas — KeyBanc Capital Markets — Analyst

Anthony C. Lebiedzinski — Sidoti & Company, LLC — Analyst

Alessandra Jimenez — Raymond James & Associates, Inc. — Analyst

Presentation:

Operator

Good morning, ladies and gentlemen, and welcome to the La-Z-Boy Fiscal 2022 Fourth Quarter and Full Year Conference Call. [Operator Instructions]

It is now my pleasure to turn the floor over to your host, Kathy Liebmann, Investor Relations. Kathy, over to you.

Kathy Liebmann — Investor Relations

Thank you, Jenny. Good morning, and thank you for joining us to discuss our fiscal 2022 fourth quarter and full year results.

With us this morning are Melinda Whittington, La-Z-Boy’s President and Chief Executive Officer; and Bob Lucian, Chief Financial Officer. Melinda will open and close the call and Bob will speak to segment performance and the financials midway through. We will then open the call to questions. Slides will accompany this presentation and you may view them through our webcast link, which will be available for one year. And a telephone replay of the call will be available for one week beginning this afternoon.

Before we begin the presentation, I would like to remind you that some statements made in today’s call include forward-looking statements about La-Z-Boy’s future performance and other matters. Although we believe these statements to be reasonable, our actual results could differ materially. The most significant risk factors that could affect our future results are described in our annual report on Form 10-K. We encourage you to review those risk factors as well as other key information detailed in our SEC filings. Also, our earnings release is available under the News and Events tab on the Investor Relations page of our website and it includes reconciliations of certain non-GAAP measures, which are also included as an appendix at the end of our conference call slide deck.

With that, I will now turn over the call to Melinda Whittington, La-Z-Boy’s President and CEO. Melinda?

Melinda Whittington — President and Chief Executive Officer

Thanks, Kathy, and good morning, everyone. Late yesterday afternoon following the close of market, we reported record results for fiscal ’22. Highlights for the year included, record delivered sales and profits for the fourth quarter and the full fiscal year for the total consolidated company; record delivered sales for our Wholesale segment; record delivered sales and profits for our company-owned Retail segment; strong delivered sales and profit performance for Joybird; returns of $118 million to shareholders through dividends and share repurchase, the highest level in our history; and the launch of Century Vision, our growth strategy through our centennial year in 2027.

All in, these are great results in a volatile environment. Sales were $2.4 billion, driven by the strength of our consumer brands, our vast distribution and strong demand for home furnishings. We delivered $3.11 in non-GAAP earnings per share, 19% ahead of last year and 45% more than pre-pandemic fiscal ’19, all while continuing to navigate the challenges of the pandemic, global supply chain disruption and a tight labor market and we finished the year strong. Sequentially, from Q3, our fourth quarter exhibited momentum in delivered sales and significant operating margin improvement.

I’d like to take this opportunity to thank our talented team across the entire company for their hard work, perseverance and dedication. Our employees are amongst our greatest assets and are responsible for delivering these phenomenal results in challenging times. As we celebrate these outstanding results, we note that written sales for Q4 reflect the consumer impact of inflationary pressures and geopolitical concerns. After a strong February with positive year-over-year growth, we saw significant deterioration of written trends in March, some recovery in April and ongoing volatility.

Written same-store sales for our company-owned Retail segment decreased 9% for fiscal ’22 fourth quarter, primarily due to lower traffic. Written same-store sales across the entire La-Z-Boy Furniture Galleries network decreased 4% in the fourth quarter. The difference versus Retail is mainly due to the base period as many Canadian stores were closed in last year’s fourth quarter and this more dramatically impacted the broader network than our own Retail segment.

For the full fiscal year written same-store sales for the La-Z-Boy Furniture Galleries network increased 1% and were flat for the company-owned Retail segment. And compared with fiscal 2020, written same-store sales for the entire network as well as for our company-owned Retail segment grew at a compound annual growth rate of approximately 15% over the last two years. Our Joybird business rose 3% more this Q4 than last year’s fourth quarter. And for the full fiscal year, Joybird’s written sales were up 27% and grew at a compound annual growth rate of 44% over the last two years.

As we begin fiscal ’23, we will leverage our strong balance sheet and historically high backlog to continue to grow the business and strengthen our capabilities for the long-term. We are focused on, first, continuing to enhance our manufacturing capability to better service our consumers and customers with shorter lead times. In fact, over the Memorial Day weekend, we were pleased to begin offering customers — consumers customized product in 10 to 14 weeks versus our previously quoted four to seven months. Second, focusing on consumer with enhanced marketing and sharper execution to drive traffic and sales conversion. And third, strategically investing in our Century Vision work to enhance the power of our La-Z-Boy brand with the consumer, disproportionately grow the young Joybird business and strengthen our company’s foundational capabilities so that we continue to profitably grow the company from this new base.

In our first year of Century Vision execution, we’ve expanded our consumer insights organization, initiated significant consumer research and launched new television spots featuring La-Z-Boy brand ambassador Kristen Bell, who resonates with a broad range of consumers, including a younger demographic. And in fiscal ’23, we have plans to expand the La-Z-Boy Furniture Galleries network by about 10 new stores. These investments will allow us to canvas the marketplace, improve shop ability and ensure our omnichannel offering enables us to engage consumers wherever they wish to purchase.

On Joybird, since acquiring the company in 2018, we’ve more than tripled sales and achieved reliable profitability. As a relatively new brand with significant opportunity to grow share, we will continue to invest in marketing to build Joybird’s brand awareness and accelerate growth. And while we’ll stay true to Joybird’s digital routes, the important element of our strategy is focusing on reaching new consumers and enhancing the omnichannel experience. We already have five well performing small format Joybird showrooms in popular urban locales and have several more stores slated to open in the first six months of fiscal ’23.

And finally, as we strengthen foundational capabilities across the company, we’re improving our ability to execute acquisitions, including opportunistic purchases of independently-owned La-Z-Boy Furniture Galleries stores, which further strengthen our high performing company-owned Retail segment. These margin-enhancing acquisitions provide the benefit of our integrated retail model where we are in a profit on both the wholesale and retail sides of the business and our strongest ownership of the end-to-end consumer experience.

In fiscal ’22, we acquired eight La-Z-Boy Furniture Galleries stores. And I’m pleased to note that we have already signed agreements to acquire six stores in fiscal ’23, five in the Denver market and one in Spokane, Washington. And we are enhancing the agility of our supply chain. Today, we are producing more furniture than ever, a testament to the strong manufacturing foundation La-Z-Boy developed over its 95-year history. Building on that strength and recognizing the environment will remain dynamic, we are focused on increasing agility across the enterprise to work down our backlog, significantly shorten lead times and position La-Z-Boy to successfully complete and win share going forward.

During fiscal ’22, we made a series of enhancements across the enterprise to drive agility and increase production capacity efficiently. We’ve added to our experienced team with key leadership from other industries to bring fresh perspective. And we’ve made structural changes across our supply chain to increase production, including expanding our North American operations with multiple new facilities in Mexico. These operations will help in servicing our backlog in the short-term as they ramp to full capacity and longer term will contribute to a lower cost manufacturing footprint with improved capabilities to service the West Coast.

We have also changed processes within our plants to maximize output with a better product mix, shifting procurement strategies with an expanded supplier base in multiple geographies and are strategically managing inventories to protect against future parts outages and disruptions. Sales and operating margin progress made in Q4 reflect these initial moves, but there is more work to do. In short, we’re structuring the business to be successful in what will continue to be a volatile environment. As a premier, well loved furniture company that ranks number two in a highly fragmented market, we’ll become more nimble going forward to ensure we grow out of the pandemic and gain share.

Now let me turn the call over to Bob to review the results in more detail. Bob?

Bob Lucian — Senior Vice President and Chief Financial Officer

Thank you, Melinda, and good morning, everyone. As a reminder, we present our results on both a GAAP and non-GAAP basis. We believe the non-GAAP presentation better reflects underlying operating trends and performance of the business. Non-GAAP results exclude items which are detailed in our press release and in the tables in the Appendix section of our conference call slides. Additionally, fiscal ’22 included 53 weeks with the additional week falling in the fourth quarter. For those of you new to La-Z-Boy, our fiscal year ends on the last Saturday of April, and every five or six years, we have an extra week in our fiscal year.

On a consolidated basis, fiscal ’22 fourth quarter sales increased 32% to a record $685 million versus the prior year quarter, reflecting higher pricing and surcharges, increased unit production and the extra week in the quarter, which increased sales by approximately $49 million. Consolidated GAAP operating income increased to a record $79 million and non-GAAP operating income was a record $65 million, an increase of 24% versus last year’s fourth quarter. The quarter had a record non-GAAP operating profit level even without the extra week of results.

Consolidated GAAP operating margin was 11.5% and non-GAAP operating margin was 9.4%. GAAP diluted EPS was $1.33 for the current year quarter versus $0.81 in the prior year quarter. Non-GAAP diluted EPS was $1.07 in the current year quarter versus $0.87 in last year’s fourth quarter, a 23% increase.

Moving on to full year results for fiscal ’22. Sales increased to a record $2.4 billion, up 36% versus the prior year, reflecting strong demand, ongoing manufacturing capacity increases, higher pricing and surcharges and the extra week in Q4, which increased sales by approximately $49 million.

Consolidated GAAP operating income increased to a record $207 million and non-GAAP operating income was a record $191 million, a 22% increase versus fiscal ’21. The year had record non-GAAP operating profits even without the extra week. Consolidated GAAP operating margin was 8.8% and non-GAAP operating margin was 8.1%. GAAP diluted EPS was $3.39 for fiscal ’22 versus $2.30 in the prior year. Non-GAAP diluted EPS was $3.11 for the year versus $2.62 in fiscal ’21, a 19% increase.

As I move to the segment discussion, my comments from here will focus on our non-GAAP reporting, unless specifically stated otherwise. Starting with our Wholesale segment, delivered sales for the quarter grew to a record $513 million, a 34% improvement compared with the prior year period and increased 24%, excluding the extra week. The growth was driven by pricing and surcharges as well as higher unit volume.

Non-GAAP operating margin for the Wholesale segment was 8.8% versus 10.2% in last year’s fourth quarter. This was driven by increased material costs, differences in channel mix and plant inefficiencies related to increasing manufacturing capacity, partially offset by pricing and surcharges. Sequentially, from Q3, non-GAAP operating margin increased 230 basis points, reflecting many of the changes made to drive agility across our supply chains.

Casegoods begin to receive a steadier stream of product from Vietnam in April, following the country’s COVID-related shutdown with elevated freight costs, continuing to impact operating margin during the first two months of the quarter. We expect casegoods operations to normalize in the first half of this fiscal year as we more consistently receive product, ship it to consumers and realize freight pricing.

For the quarter, our Retail segment delivered sales were a record $233 million, a 20% increase over prior year’s fourth quarter and 12% higher excluding the extra week. Same-store delivered sales were 16% higher versus the year ago quarter. Retail posted record high non-GAAP operating profit dollars and non-GAAP operating margin increased to 13% versus 12.2% in the prior year quarter, driven primarily by fixed cost leverage on the higher sales volume. As Melinda noted, growing La-Z-Boy Furniture Galleries network is a key element of Century Vision. And we look forward to our company-owned Retail segment continuing to grow and becoming an even larger contributor to our long-term success.

I’ll now spend a few moments on Joybird, which is reported in corporate and other. Joybird delivered a great quarter with record delivered sales of $53 million, a 40% increase versus the prior year quarter and a 30% growth rate adjusting for the extra week of sales. For the quarter, Joybird delivered profitable growth with an improved gross margin versus last year’s fourth quarter. During the quarter, the Joybird business exhibited multiple positive sales metrics, including written sales, web conversion, retail store traffic, average order value and average sales price. Moving forward, we will continue to invest in marketing both digitally and through new channels to drive brand awareness, customer acquisition and disproportionate growth of this relatively young brand.

Putting all of this together, consolidated non-GAAP gross margin for the entire company for the fiscal year decreased 390 basis points versus the prior year. The decrease was due primarily to higher raw material and freight costs, costs related to increasing manufacturing capacity, labor challenges and the unavailability of component parts which resulted in plant inefficiencies. These costs were partially offset by pricing and surcharge actions which were increasingly realized in the second half of the fiscal year as they begin to flow through the backlog to delivered sales.

Consolidated non-GAAP SG&A as a percent of sales for the year decreased 300 basis points, primarily reflecting fixed cost leverage on the higher sales volume across all our businesses. Our effective tax rate on a GAAP basis for fiscal ’22 was 25.9% versus 26.3% in fiscal 2021. Impacting our effective tax rate for fiscal ’22 was a net tax benefit of $0.7 million from the tax effect of the fair value adjustment of contingent consideration liability related to the Joybird acquisition. We expect our effective tax rate to be in the range of 25% to 26% for fiscal ’23.

Turning to cash. For the year, we generated $79 million in cash from operating activities, finishing the year strong with $34 million in cash generation in Q4. We ended fiscal ’22 with $249 million in cash, no debt and held $27 million in investments to enhance returns on cash. During the year, we invested $72 million in higher inventory levels to help protect against supply chain disruptions and support increased production and delivered sales. We also spent $77 million in capital during the year, primarily related to retail store upgrades, new upholstery manufacturing capacity in Mexico, plant upgrades at our manufacturing and distribution facilities and technology projects.

In Q4, we continue to buy back shares, spending $15 million repurchasing more than 400,000 shares of stock in the open market, leaving 7.5 million shares in our existing authorized share repurchase program. For the full fiscal year, we returned $91 million to shareholders via share repurchase and $28 million through dividends, including $7 million paid in dividends in the fourth quarter.

Before I turn the call back to Melinda, let me highlight several important items for fiscal ’23. Please keep in mind that fiscal ’23 will be a 52-week year and comparisons will be against the 53-week fiscal ’22 period. Additionally, comparability will be affected, as always, by fiscal ’23’s first quarter containing 12 production weeks, reflecting our annual one week shutdown in July.

While we maintain our long-term commitment to steady sales and margin progress, we anticipate results may vary during fiscal ’23 as macroeconomic factors and geopolitical events impact consumer confidence and furniture demand. Despite this volatility, we remain focused on driving demand to outperform the industry, strengthening our agility, working to reduce our large backlog and continuing to navigate through supply chain disruptions to better service the demand for our highest value products, which disproportionately sell through our Furniture Galleries stores. We will prudently navigate through the current environment in the short-term, while executing against our Century Vision strategy to drive long-term profitable growth.

With the height of the pandemic behind us, we expect seasonality to return to the industry as consumers revert back to normal spending patterns and focus less on home furnishings purchases during the summer months. As a result, we will likely experience lower than year ago written sales during Q1 and Q2 for both our direct-to-consumer businesses and our wholesale customers as they experience fluctuating consumer demand and related inventory adjustments.

As we continue to service our existing backlog and improved delivery times, we are also beginning to increase investments in marketing to drive demand for our strong brands to leverage their power in the marketplace. In addition, we expect a slight decline in delivered sales per week in our Wholesale segment, driven by a number of larger customers which have temporarily delayed receiving product due to warehouse constraints. We expect these delays to clear up in the second quarter.

Taking all these factors into consideration, we now expect delivered sales for fiscal ’23 first quarter to be up 7% to 10% versus the first quarter of fiscal ’22 in a range of $560 million to $575 million. Additionally, we expect consolidated non-GAAP operating margin to be in a range of 6.5% to 7.5%. Finally, we expect non-GAAP adjustments for purchase accounting charges for the year to be in the range of $0.01 to $0.03 per share. Capital expenditures are expected to be in the range of $85 million to $95 million for fiscal ’23 as we invest to strengthen the company for the future, consistent with our Century Vision strategy.

Our capital allocation strategy over the long-term is to invest approximately half of operating cash flow into the business and return the other half to shareholders through dividends and share repurchases. This 50-50 split may vary in any given year. In the near-term, including fiscal ’23, we have numerous strategic investments to make as we execute Century Vision and anticipate capital allocation to be more heavily weighted to investments in the business where our ROIs are 2 to 3 times our cost of capital.

And now, I will turn the call back to Melinda.

Melinda Whittington — President and Chief Executive Officer

Thanks, Bob. I’m very excited about the future of La-Z-Boy Incorporated. We manufacture and sell great brands, have broad distribution, a strong and growing company-owned Retail segment and a talented team in place to execute our Century Vision. Although the macroeconomic environment is volatile and will remain choppy for the foreseeable future, our focus is on the long-term, controlling what we can and driving agility through every facet of the organization. Our balance sheet is strong and will allow us to move through this uncertain period, while making important investments in our future. We have every intention of growing from our new base and believe the best is yet to come as we deliver long-term profitable growth and returns to all stakeholders.

We thank you for your time this morning, and I’ll turn the call back to Kathy.

Kathy Liebmann — Investor Relations

Thank you, Melinda. We will begin the question and answer period now. Jenny, please review the instructions for getting into the queue to ask questions.

Questions and Answers:

Operator

No problem. [Operator Instructions] Your first question is coming from Brad Thomas of KeyBanc Capital Markets. Brad, over to you. Please check you’re not on mute, Brad.

Bradley B. Thomas — KeyBanc Capital Markets — Analyst

Yeah. Sorry about that. It was muted. Good morning. Good morning, Bob and Kathy. And first of all, just wanted to give my congratulations on a strong quarter and obviously a record year for the company.

Kathy Liebmann — Investor Relations

Good morning, Brad. Thank you.

Bradley B. Thomas — KeyBanc Capital Markets — Analyst

We’re getting a lot of questions about recent trends in the industry, and so I had a couple of questions about that. But I was hoping to address, maybe first of all, Melinda, I believe you commented that trends have been more volatile of late. Could you give us any more detail on how May and June have been trending so far?

Melinda Whittington — President and Chief Executive Officer

Yeah. I mean, since year end, traffic continues to be challenged across the industry and there is decent amount of volatility on any given week or month right now. I will tell you that as we look at this going forward, the first thing we continue to be focused on is the production side of things and what we’ve been working on over the last couple of years on our ability to produce, both to manage cost to service the backlog that we have, and importantly, to get down to shorter lead times to help impact that consumer proposition and drive conversion on the traffic that we do see.

As far as the consumer, the entire industry over the last three, four months is certainly seeing a slowdown in traffic, and I think there’s a couple of things driving that. Overall, consumer sentiment no doubt is challenged as we talked about everything from inflation and we can certainly go into more there. The other piece that I think we don’t know the relative impact of each of these is the return of seasonality. So for the last couple of years, we really haven’t had kind of a big difference quarter-to-quarter in consumer sentiment. This is the first spring in several years that consumers were getting a regular spring and summer. People are traveling again and all.

And so if you go back pre-pandemic, the spring and summer were always significantly slower than kind of the back half of our year. And so that return of seasonality is definitely driving some of it. And then we have to keep in mind that furniture pricing is still quite high across the industry. We’re 25% to 35% higher due to all of the input costs than we were pre-pandemic. And again, those are all across the industry.

So what we’re doing about it? Like I said, the first one is really making sure we’re managing our own production capacity so that that proposition is better and we have shorter lead times over Memorial Day. We were now quoting 10 to 14 weeks on custom furniture versus four to seven months. We’re increasing marketing spend back up to levels more consistent with what we were doing pre-pandemic. You’ll recall, over the last two years, we backed off significantly because there was really no reason to drive the consumer into an urgency to purchase and then bring them in the store and have them frustrated by lead times. And then we’re also really focused on in-store execution. So while traffic is lighter, our conversion remained strong with the excellent work that we’re doing in our stores. So that’s what we talked about. I think the reality across the industry is challenge on traffic right now with the consumers, some of that more temporary than other. And so we’re working on what we can control.

The other piece we have is of course for a portion of our business, we’re selling direct to the consumer. For more than half of our business, we’re selling in a B2B capacity. And so we’re seeing a little bit of our customers sort of adjusting their stock inventory right now, but still healthy pull through on the custom side. So that remains our focus on that side as well.

Bradley B. Thomas — KeyBanc Capital Markets — Analyst

And to follow-up on that, Melinda. What are you seeing in terms of the trends at Joybird and how is that brand performing versus La-Z-Boy? Is it performing better? Is it — has it slowed down more because it’s more D2C or perhaps a customer that might be more constrained by the environment we’re in?

Melinda Whittington — President and Chief Executive Officer

Yeah. I think if you look at — so back pre-pandemic times, right, we used to talk about Joybird was maybe written trends in the high-teens when our older more mature La-Z-Boy business had written trends in the low-to-mid single-digits roughly directionally. That differential has continued. If you look at sort of for the fiscal year, for the fourth quarter and ongoing, we’re still — we’re seeing slower — some slowing of the written trend, but it’s still positive and significantly stronger than what we’re seeing across the entire furniture industry on average.

Bradley B. Thomas — KeyBanc Capital Markets — Analyst

Thanks. It’s very helpful. And then with regard to the retail customers that you have that have wanted to delay receipt of product, I presume this is a function of their sales having slowed down. How does that work? How long can they delay it out before this starts to turn into canceled orders? And what are you hearing from these larger customers?

Melinda Whittington — President and Chief Executive Officer

In the near-term, it’s really been more — and again, time will tell here. But in the near-term, it’s really been more a matter of you think about these retailers spent the last year and a half trying to get product from anywhere they could and ordering. And then as things have started to deliver, they’ve got warehouse constraints in the near-term. And in particular, suddenly, where they may be ordered ahead on some stock, that’s filling up warehouses, that is slowing down their ability to deliver the orders that are sold through to there end consumer.

And so really the near-term has been — the near-term effects have been more about just flow through and getting the right product in there. You might have a lot of one thing and not as much of another. And that could be from us or for general dealers that could be from a lot of different consumers. So I really see the majority of that shift that we’ve seen thus far has been much more about sort of near-term shifting as we’ve gone from this very dramatic, everybody trying to get anything they could for the consumer to suddenly kind of a slowdown with the consumer and just the logistical side of managing that.

Bradley B. Thomas — KeyBanc Capital Markets — Analyst

That’s very helpful. Thanks so much, Melinda, and best of luck.

Melinda Whittington — President and Chief Executive Officer

Thank you.

Operator

Your next question is coming from Anthony Lebiedzinski of Sidoti. Anthony, please ask your question.

Anthony C. Lebiedzinski — Sidoti & Company, LLC — Analyst

Yes, good morning, and thank you for taking the questions. So first, in terms of your…

Melinda Whittington — President and Chief Executive Officer

Good morning.

Anthony C. Lebiedzinski — Sidoti & Company, LLC — Analyst

Good morning. So in terms of your own production capacity, just wanted to get a better sense as to how did the quarter progressed in terms of your delivered revenue gains? Was it consistent throughout the quarter or was there any notable changes as the quarter progressed?

Bob Lucian — Senior Vice President and Chief Financial Officer

It was fairly consistent, a slow increase as the quarter progressed. Our latest — our last plant down in Mexico, Torreon, was coming online and that was allowing us to slowly increase capacity over the quarter as it went through. So we finished the quarter well.

Anthony C. Lebiedzinski — Sidoti & Company, LLC — Analyst

Got it.

Melinda Whittington — President and Chief Executive Officer

We took some opportunity in the fourth quarter to reposition some lines to make sure — we’ve talked for a long time about like our Mexico cells. We’re making maybe more simple product as they were training. We’ve started re-pointing cells as well to make sure we’re making the right product for demand. And so we feel good about the progress there as well.

Anthony C. Lebiedzinski — Sidoti & Company, LLC — Analyst

Got it. Yes. So yeah, Melinda, during your remarks, you said you changed some of the processes in your plants. So is that what you referred to or is there something else there as well?

Melinda Whittington — President and Chief Executive Officer

Yes, sir. Yeah.

Anthony C. Lebiedzinski — Sidoti & Company, LLC — Analyst

Okay. Got it. Okay. Thanks for that. And then just in terms of your inventory, so obviously, like a lot of other companies, your inventories have increased. How would you characterize the health of your inventory? And kind of given what’s going on with traffic and just overall macro concerns, how does — how do you feel about the health of your inventory?

Bob Lucian — Senior Vice President and Chief Financial Officer

We ended the year with the level of inventory we wanted to end the year with. We’re still holding that right now given what’s going on over in China to ensure that the lockdowns and some of the delays that are occurring from some of the parts and fabric and things like that to come from China don’t impact our production facilities. So we’ll continue to maintain a slightly higher level of inventory to make sure that we’re able to make product as we’re able to.

And the inventory, what I’m talking about there is on the raw material side. The inventory from a finished product side, that’s generally speaking, being made and being moved out and we’re adjusting production as needed to ensure we don’t build up a whole bunch of finished goods inventory as we see customers modify their receipt timings.

Anthony C. Lebiedzinski — Sidoti & Company, LLC — Analyst

Got it. Okay. And then in terms of price increases, obviously, as you noted, pricing has gone up quite a bit. Are you — so within the guidance that you provided for the first quarter, does that include any additional price increases that you may have taken since the fiscal year end or how should we think about additional pricing actions that you may take?

Bob Lucian — Senior Vice President and Chief Financial Officer

Well, we never comment on future pricing actions we take. We will always continue to look at what’s going on with the pricing of our materials and price accordingly to make sure that we’re maintaining our margins. The last pricing we took was in February. And that pricing is working its way through the backlog, parts of it’s coming in faster than others. But generally speaking, that’s working its way through and will continue to work its way through Q1 and into Q2.

Anthony C. Lebiedzinski — Sidoti & Company, LLC — Analyst

Got it. Okay. And then lastly from me. So you stated that you will open 10 stores in fiscal ’23. So is this a new annual run rate or how should we think about your long-term plans for store growth?

Melinda Whittington — President and Chief Executive Officer

You’ll see some variability in any given year. Honestly, some of it right now it’s happening even in our Joybird stores has been around — you don’t hit quite the cadence you’d like because of just construction delays. But in general, what we’ve talked about is that we saw that we see the opportunity for about 400 stores, and today we’re at about 350. So — and we’ve said we’ll do that over our Century Vision time period. So the 10 run rate is not a bad ballpark number, but there will certainly be some volatility on any given year.

Anthony C. Lebiedzinski — Sidoti & Company, LLC — Analyst

Got it. Thank you, and best of luck.

Melinda Whittington — President and Chief Executive Officer

Thanks, Anthony.

Bob Lucian — Senior Vice President and Chief Financial Officer

Thanks, Anthony.

Operator

Your next question is coming from Bobby Griffin of Raymond James. Bobby, please ask your question.

Alessandra Jimenez — Raymond James & Associates, Inc. — Analyst

Good morning. This is Alessandra Jimenez on for Bobby Griffin. Thank you for taking our questions.

Melinda Whittington — President and Chief Executive Officer

Good morning.

Alessandra Jimenez — Raymond James & Associates, Inc. — Analyst

First, I just wanted to touch a little bit on the wholesale backlog. It continues to trend well above historic levels and even was up year-over-year at the end of the fiscal year. Can you talk about your expectations for working down that backlog this year?

Melinda Whittington — President and Chief Executive Officer

Yeah, I want it to go down. So if you think about what’s in the backlog, there are — I guess, I’ll start by saying, there are two things in the backlog. One are orders that are sold all the way through to the end consumer. And so to me that backlog, while it’s nice to have written orders on your books, that backlog is a dissatisfied consumer that’s waiting for their product. So historically, we have been able to deliver customized product to our end consumer in four to six weeks and that’s been out in the four to seven months. We are very pleased that since Memorial Day with a real focus on that custom order to the end consumer, as of Memorial Day, we’ve been able to quote 10 to 14 weeks. So that’s real progress. That will make the backlog go down, but that’s a good thing.

The other thing that’s in the backlog then is stock orders. And again, somewhat similarly, these are for the most part B2B customers that have placed orders with us on what they believe they’re going to need to keep an inventory. When we’re out six months on production, they’re having to put six months of orders on the books with us for backlog to ensure they have their production space. As we bring this capacity on and get more and more efficient, if we’re three months out, we only need three months of orders on the books. If we’re one month out, we only need one month.

So our goal this year is to bring that backlog down very significantly, ideally to kind of the minimal level, sort of the four to six week backlog that we’ve had pre-pandemic historically, but on a larger manufacturing base which would mean more throughput. Now there’s obviously there are multiple variables as we’ve talked over recent years. There’s how many orders are coming in and how many orders are servicing. And so I expect that we’ll see some volatility on that as well as we move through the year.

Alessandra Jimenez — Raymond James & Associates, Inc. — Analyst

Okay. That’s really helpful. And then just a follow-up on that. How much flexibility do you have with your current capacity build-out? How do we protect from getting too much capacity?

Bob Lucian — Senior Vice President and Chief Financial Officer

See, the way we manage that and the way we’ve been planning to manage all along is, as we see or if we see demand go down, we will manage it via a combination of reducing over time that’s being run at virtually every single one of our plants right now. We have the opportunity to reduce shifts. And again, in this business, there is some natural attrition that goes on in the plants because it’s difficult manual work that if we choose to try to drop our production of the plant, just not rehiring that allows us to also right-size the plant from a production perspective over time. So we’re going to employ those types of strategies to try to balance out our production so that we balance it out consistent with what we are seeing from incoming orders as well as trying to, again what Melinda just talked about, working down the backlog.

Alessandra Jimenez — Raymond James & Associates, Inc. — Analyst

Okay, perfect. And then lastly for me. You guys mentioned beginning to increase investments in marketing. Can you walk us through some of those investments? Is it just a function of additional advertising of existing content? Are you developing new content?

Melinda Whittington — President and Chief Executive Officer

A bit of both. So from a pure share of voice standpoint over the last two years as a percent of sales, we have been significantly down. And we’ve called that out for a while, because again, in a world where the consumer was coming in at record levels already and then our backlog was as long as it was, we’re choosing not to spend money to exacerbate the frustration, if you will. Again, we still kept some level of share of voice on across a total mix.

As we go forward, the — just the share volume we’re taking back to kind of share of voice levels are heading back towards levels like we had pre-pandemic. The mix of that marketing and the content is not at this stage dramatically different. But as I mentioned in my prepared comments, as we look at our Century Vision work and really reinvigorating kind of that consumer focus and being data based on what resonates with the consumer, you will continue to see a shift over time in the content, in the types of marketing mix and really just how we’re reaching the consumer overall, because that is part of the work certainly on the La-Z-Boy brand to ensure we’re reaching the consumer in a meaningful way, we’re helping a broad array of consumers and certainly even aging down that consumer in a way that they recognize we have product that is right for them.

It go back to, we always talk about the La-Z-Boy brand is people will have very positive attributes when they think about the La-Z-Boy. They don’t always think about the La-Z-Boy brand being for them. And so that’s a lot of the database work to ensure we’re telling that story well. And then of course, we’ve been clear that within the Joybird brand, being that it’s still quite a young brand, we’ll disproportionately invest there to continue to grow that brand recognition.

Alessandra Jimenez — Raymond James & Associates, Inc. — Analyst

Thank you. That’s very helpful. Best of luck on the first quarter and the balance of the year.

Melinda Whittington — President and Chief Executive Officer

Thank you.

Bob Lucian — Senior Vice President and Chief Financial Officer

Thank you.

Operator

Thank you very much. There appear to be no further questions in the queue. I will now hand back over to Kathy.

Kathy Liebmann — Investor Relations

Thank you very much, Jenny. Thanks everyone for joining our call this morning. If you have any additional questions, please reach out to me. Have a great day.

Melinda Whittington — President and Chief Executive Officer

Bye, bye.

Operator

[Operator Closing Remarks]



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